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    Gen Eco p1 Iesiss 20 QP

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    Gen Eco p1 Iesiss 20 QP

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    Karan Panwar
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    Gen Eco p1 Iesiss 20 Qp

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    Gen Eco p1 Iesiss 20 QP

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    Karan Panwar

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    © All Rights Reserved
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    DFSE-U-ECM GENERAL ECONOMICS Paper -I Time Allowed : Three Hours Maximum Marks : 200 Question Paper Specific Instructions Please read each of the following instructions carefully before attempting question: There are THIRTEEN questions divided under THREE sections. The ONLY question in Section A is compulsory. In Section B, FIVE out of SEVEN questions are to be attempted. In Section C, THREE out of FIVE questions are to be attempted. Candidates should attempt questions / parts as per the instructions given in the sections. The number of marks carried by a question |part is indicated against it. Attempts of questions shall be counted in sequential order. Unless struck off, attempt of a question shall be counted even if attempted partly. Any page or portion of the page left blank in the Question-cum-Answer Booklet must be clearly struck off. Candidates are required to write clear, legible and concise answers. Answers must be written in ENGLISH only. DFSE-U-ECM SECTION A Answer all the following seven parts. (a) Show the conditions for a Cobb-Douglas production function under : @ increasing returns to scale Gi) constant returns to scale Gii) diminishing returns to scale Are the Laws of Returns compatible ? Define homothetic preferences. Explain the common characteristics of such preferences with the help of necessary diagrams. What is monopoly power ? What factors determine the amount of monopoly power ? Explain the difference between Bandwagon effect and Snob effect. What is meant by deadweight loss ? Why does a price ceiling usually result in a deadweight loss ? State the fundamental theorems of Welfare Economics. Public goods are both non-rival and non-exclusive. Explain each of these terms and show clearly how they differ from each other. DFSE-U-ECM SECTION B Answer any five of the following seven questions. Q2. (a) Explain the meaning of Nash equilibrium. How does it differ from an equilibrium in dominant strategies ? 8 (b) Let market demand faced by the duopolists be P=100-05Q; Q=Q,+Q) and their respective cost functions as Cy = 5Q, and Cy = 5Qp. Find out Cournot-Nash Equilibrium. 10 Q3. (a) Suppose the utility function for the consumer takes one of the following forms : @) — U=50x + 20y (i) U=20x + 50y (ii) U=80x + 40y ‘The budget of the consumer is € 10,000. The prices of good X and good Y are © 50 and % 20 per unit respectively. Determine the possibility of determination of the equilibrium basket in each case using diagram and comment on the nature of the solutions. 12 (b) Outline how the production possibility frontier can be used to explain the concept of opportunity cost. Why is the production possibility frontier concave to the origin ? 6 Q4. Suppose that a firm’s production function is given by the Cobb-Douglas function : Q = K“LP (where a, B > 0). The firm can purchase all the K and L it wants in competitive input markets at rental rates of r and w respectively. (Show that cost minimisation requires " - =. What is the slope of the expansion path for this firm ? o 8 Gi) Assuming cost minimisation, show that total costs can be expressed as a function of Q, r and w of the form a TC = BQT, wath, po, where B is a constant depending on « and B. 3 (iii) Show that if « + B = 1, total cost (TC) is proportional to Q. 3 (iv) Calculate the firm’s marginal cost curve. 4 DFSE-U-ECM 3 Q5. (a) Distinguish between economic rent and transfer earnings. Can economic rent exist in the long run ? Justify your answer. 9 (b) Explain graphically the role of elasticity of supply of a factor determining the economic rent. 9 Q6. (a) Why do externalities prevent markets from being efficient ? How does Coase theorem correct an externality ? 10 (b) Using a particular industry, explain what is meant by economies of scale and economies of scope. How do these affect the industry you have identified ? 8 Q7. (a) Ina contest, two judges ranked eight candidates A, B, C, D, E, F, G and H in order of their preference as shown in the following table. Find the rank correlation coefficient. A/|B|c/|pD/E|F First Judge s5|2{sl{i|4}e6]3|7 Second Judge 4}/5/7/3/2|]s8lilfe 9 (>) The regression equations of the variables x and y are 8x — 10y + 66 = 0 and 40x — 18y = 214. The variance of x is 9. Identify the two regression lines. Find the simple correlation coefficient between the two variables and variance of y. 9 Q8. Discuss Social Choice theory in Economics. Distinguish between the views of Amartya Sen and Kenneth Arrow in making choices for social welfare. 18 DFSE-U-ECM 4 SECTION C Answer any three out of the following five questions. Q®. (a) Consider a two-variable linear regression model Y,=0+ BX, +U; and U,=pU,1+&; |p| <1 Find Mean, Variance and Covariance of random disturbance term (U,). Consider the model of wage determinatior Ye = By + BoX, + Ba¥ya + Ut where Y = wages X = productivity U,= Up a+e%; -l

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